DOJ Investigates Beef Price Fixing Amid Rancher, Attorneys General Concerns
The pandemic has beef markets on a roller coaster, and Shohone, Idaho's Amie Taber is among the ranchers along for the ride.
"About a month ago ... we had a load of cattle that was supposed to ship," Taber said. "They called us and said, 'We will not be taking cattle this week.'"
Later that week, Taber got good news. The processing plant did want two loads after all. So she sent out two semis.
"And an hour later those cattle came back and got offloaded at the feedlot, and said they wouldn't be taking any cattle for at least two weeks, which was really frightening," she said.
"And in the meantime, we were watching the beef prices go from a sustainable $1.05 drop down to less than a dollar."
Taber said they've been lucky, though. Her ranch has been selling more directly to consumers, and they have good relationships with local butcher shops. Prices are also starting to return, though they're not back to pre-COVID-19 levels.
Still, the pandemic did send cattle prices to lows not seen since 2010. Meanwhile, wholesale beef prices set record high prices.
That highlights concerns Taber's had for years. She understands there are costs between selling a cow and getting a beef patty, "but, you know, if I'm getting 85 cents a pound for prime beef, why is hamburger $8 a pound? That doesn't – that doesn't connect."
The question is: Have beef processing companies – just four of which control at least 80% of the market – been working together to fix prices to make more money?
That's something ranchers and cattlemen's associations want to know. The U.S. Department of Justice and attorneys general around the country are getting involved, including Montana's Tim Fox.
"It's not every day that you get phone calls from the attorney general of the United States or his top antitrust lawyer. And now these folks are on my speed dial," Fox said.
Fox was one of 11 attorneys general who encouraged the DOJ to investigate price fixing. Before that, though, Fox said he had already been hearing concerns from ranchers and looking into the issue.
"And so I had some information that I thought was perhaps something that Attorney General Barr should hear," he said.
While it's not clear whether price fixing has occurred, what Fox is certain of is that a market with so few companies at the top is vulnerable to things like price fixing.
"That is a recipe for problems in and of itself, when you have an oligopolistic situation with four big companies who are really concentrating the market," he said.
Usual economic forces do explain at least some of the price fluctuations. Massive packing plants are slowing down or closing as workers get sick. It's a bottleneck. So you have lots of cattle with limited places to go. That depresses prices for ranchers. And then you have less meat being processed. And that means higher prices for consumers.
"I think in any market, whether you're talking about cattle or some other production system where there either aren't enough buyers or aren't enough sellers, that changes the dynamic to some extent," said Kaitlin McCullock, director of the Livestock Marketing Information Center.
But do rules of supply and demand fully explain the low prices of cattle and the high prices of beef during the pandemic? McCullock said that's a tricky question to answer.
The U.S. Department of Justice is trying to figure it out, though, and if they are found to be at fault, Fox said the companies will be prosecuted. Even if they haven't done anything illegal, though, Fox said "We still suggest that there be regulatory strategies that should be explored to promote competition, address market manipulation and correct and protect the consumer side. That is, at the very least, the outcome that we're looking for."
The U.S. Department of Agriculture has also been investigating price fixing concerns, but they've been doing that since last summer. At that point, price fluctuations following a fire at a Tyson Food's beef processing plant in Holcomb, Kansas caused similar price-fixing concerns.
The top beef processing companies – Tyson, Cargill, JBS and National Beef – could not be reached for comment.
The North American Meat Institute, a group that represents meatpackers, also wouldn't comment on the Justice Department investigation. However, they did say in an email that packers need cattle producers and vice versa, and "We will find a way through this challenge together."
It added that there are federal agencies and antitrust regulations in place to keep agriculture markets fair, and that the Justice Department has vetoed prior merger requests.
Beyond price fixing and market consolidation, though, there are also concerns about regulations. Cameron Mulrony is the executive vice president of the Idaho Cattle Association, and his association brought up concerns that market consolidation was caused by regulations in a letter to Agriculture Secretary Sonny Perdue.
"What is prohibiting the mid- to small-level facilities from being successful in the U.S.? Why are these facilities not prevalent across the nation?" he asked. "Is there too much regulatory burden that makes it not feasible for those? Or is it that, you know, they can't compete with the larger facilities in being able to procure cattle and contracts?"
Regulations are of concern to people like Amie Taber, too. While her Idaho operation is selling more cattle straight to consumers, she has to wait in long lines at local butcher shops right now, which are slammed with people who couldn't get cattle butchered at major processing plants.
"Normally this time of year, I can call them on Monday and deliver a steer on Tuesday or Wednesday," she said. "And when I called to get one of our steers that we sold (butchered), we couldn't get a butcher date until July 20."
If Taber wanted to butcher animals herself to sell to consumers, she'd have to go through the same regulations and get the same inspectors as some of the big operations.
The U.S. Department of Justice hasn't announced a timeline for when it will conclude its investigation.
Find reporter Madelyn Beck on Twitter @MadelynBeck8
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This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.
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